Despite persistent oil price volatility the Canadian Dollar (CAD) exchange rate has remained dominant against peers, including the British Pound (GBP), the Euro (EUR) and the US Dollar (USD)
The British Pound has moved 0.21 per cent higher verses the Canadian Dollar today as speculation regarding the Brussels summit continues to weigh on sentiment.
Even an 8-year high budget surplus for January and strong retail sales haven’t been enough to push GBP-CAD into positive territory.
Martin Schulz, European Parliament President, is the latest high-profile European Union figure to express a belief that the Brussels summit will have a positive conclusion, strengthening GBP/CAD.
Schulz has said that, ‘My feeling is we could tomorrow agree on the basis of the drafted texts, to which the UK made proposals, but there are remaining problems.’
The current EU summit in Brussels has weakened the CAD to GBP exchange rate, despite an earlier drop in confidence for the Pound on the possibility that David Cameron might fail to secure a deal.
However, European Commission President Jean-Claude Juncker has told the press that he is confident a deal can be reached, even if some of the terms need to be renegotiated.
Before we continue with the news, here are today’s live interbank fx rates for your reference:
On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
FX markets see the pound vs pound exchange rate converting at 1.
At time of writing the pound to euro exchange rate is quoted at 1.165.
Today finds the pound to us dollar spot exchange rate priced at 1.255.
NB: the forex rates mentioned above, revised as of 3rd May 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Oil prices saw a fresh rally at the start of the week, boosted by the news that Saudi Arabia and Russia were meeting to discuss the current situation of the commodity market, sending the Canadian Dollar (CAD) higher as risk aversion declined.
However, traders were soon disappointed to hear that the nations were only willing to agree to freeze production at its January level at this juncture, with the deal conditional on all other major oil producers agreeing to do so.
Although this did initially push the Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate lower stronger domestic data soon helped to shore up the commodity-correlated Canadian Dollar.
Pound to Canadian Dollar Spot Exchange Rate Forecast
Existing Home Sales strengthened markedly on the month in January, climbing 0.5% and suggesting that the Canadian housing market was showing some measure of strength at the start of the year.
While Iran has reportedly refused to agree to the oil production freeze, scuppering the proposed deal, this has failed to wipe out all of Brent crude’s recent gains, allowing the CAD exchange rate to remain on bullish form on Wednesday.
Comments from Canadian Finance Minister Bill Morneau have encouraged speculation that the Bank of Canada (BOC) will hold off on monetary loosening for longer, as researchers at Scotiabank note:
’The March budget may, we think, include significant spending measures to bolster growth. We expect the CAD to respond positively to fiscal stimulus as the measures are likely to ease pressure on the BOC to ease monetary policy down the road.’
Pound Sterling on Downtrend after Mixed Employment Data
After a somewhat mixed UK Consumer Price Index report Pound Sterling (GBP) has been driven lower on Wednesday by an equally disappointing raft of employment data.
A static Unemployment Rate and weaker wage growth appear to have further damaged the case for the Bank of England (BoE) to begin raising interest rates in the near-term, with the performance of the domestic economy proving persistently muted.
Given that various members of the Monetary Policy Committee (MPC) have stressed their desire to see stronger wage growth before voting for a rate hike, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has slumped sharply in response.
Discouraging ECB Comments Weigh on Euro (EUR) Exchange Rate
Hopes that the European Central Bank (ECB) will move to loosen monetary policy further in March have equally been dented, with comments from ECB policymaker Ewald Nowotny prompting Euro (EUR) softness.
Nowotny seemed to be ill at ease with current market expectations regarding the ECB’s March meeting, as investors have already largely priced in a decent level of intervention based on recent commentary from President Mario Draghi.
With the suggestion that markets may have overdone their expectations the Euro to Canadian Dollar (EUR/CAD) exchange rate has weakened substantially on Wednesday afternoon.
Improved US Production Data Fails to Boost US Dollar to Canadian Dollar Exchange Rate
The latest US Industrial and Manufacturing Production figures both bettered forecast today, offering an indication that the world’s largest economy is not in such a fragile state as some might believe.
Nevertheless, given recent comments from members of the Federal Open Market Committee (FOMC) the likelihood of the central bank tightening monetary policy further in the near future has been diminished.
Consequently the US Dollar to Canadian Dollar (USD/CAD) exchange rate has been on bearish form, as safe-haven demand fails to shore up the US Dollar.